Apple Inc. (AAPL) Kills the iPod Nano and iPod Shuffle

Apple Inc. (NASDAQ:AAPL) killed off two of its remaining iPod products today, and adjusted the configuration and pricing of the iPod Touch. The iPod Nano and iPod Shuffle have been discontinued, eliminating the last of its non-iOS iPods. The iPod Touch remains in the lineup, but at a lower price and with fewer configurations to choose from. Apple stock is down on the news.

Source: Apple

The End of an Era

Before the iPhone and the iPad, there was the iPod. The portable music player kicked off Apple’s transformation from a computer company to a consumer electronics giant. AAPL discontinued the iPod Classic –the remaining throwback to the original, scroll wheel iPod– in 2014, but kept the iPod Nano, Shuffle and Touch.

It’s hard to imagine now that we’re firmly in the iPhone era, but AAPL stock growth was once powered by the iPod. However, times change and people now prefer to stream music instead of carrying it around on a dedicated device.

The iPod Nano and iPod Shuffle disappeared from Apple’s website this morning. The company then confirmed that it had discontinued the products (which were first introduced in 2005), releasing a statement to Business Insider:

“Today, we are simplifying our iPod lineup with two models of iPod touch now with double the capacity starting at just $199 and we are discontinuing the iPod shuffle and iPod nano.”

The iPod Touch is now available with 32GB of storage for $199, or 128GB of storage for $299.

Why Kill the iPods?

Apple has been on a bit of a tear over the past year, discontinuing a number of products. In the past year, the company exited the router business, discontinuing the Airport Extreme and Airport Express, stopped making computer displays when it eliminated the Thunderbolt display, and killed the popular 11-inch MacBook Air.

The company has never been shy about getting rid of products to simplify its offerings. At this point, sales of the iPod are low enough that they have little impact on AAPL’s bottom line. In fact they’re low enough that the company stopped reporting iPod sales altogether in 2015 and the iPod Touch likely made up the bulk of what was left. With the popularity of streaming music and the ubiquity of smartphones, it just didn’t make sense to continue offering portable music players –especially ones that didn’t run iOS.

Why leave the iPod Touch in the lineup? Aside from the fact that it lets AAPL say that it still offers an iPod option, the iPod Touch has been popular with parents who want to introduce their kids to the App Store without having to buy an iPhone or iPad. Although several generations behind those devices in terms of specs, the iPod Touch still runs many games and apps, plays video and takes photos — it’s basically an older iPhone without calling capability.

The hit AAPL stock took on the news (at time of writing it had dropped 3.5%) is likely just a knee-jerk reaction to a product being eliminated. When Apple discontinues anything, there can be some negativity around the news. However, by dropping the iPod Nano and iPod Shuffle, the company can focus more resources on the iPhone and new products like the HomePod. The iPod Touch is still there — and more affordable than ever — for parents. The people who are feeling nostalgic for an authentic iPod music experience can always turn to eBay Inc (NASDAQ:EBAY) to get their fix.

The iPod Nano and iPod Shuffle had a good 12-year run…

As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.

« We Could Have Had Cell Phones 40 Years Earlier What Gold Can Tell Confused Investors About Short-Term Stock Prices »